SABMiller planned to take its African beer brand, Chibuku, to 10 countries across the continent, as part of its strategy to produce more affordable beer for lower-income consumers while taking market share from the “informal” alcohol sector, the brewer said yesterday.
Chibuku is an opaque beer based on traditional African recipes using maize and sorghum. According to the brewer, Chibuku is a low-alcohol beer that ferments in the package, with alcohol strength rising from 0.5 percent on day one up to 4 percent by expiry on day five.
SABMiller’s research found that new markets, including Tanzania, Ghana, Nigeria, South Sudan, Angola, Zambia, Zimbabwe, Uganda, Botswana and Malawi represented a value opportunity of about $3.7 billion (R32.2bn).
The research showed that 31 million hectolitres of the alcohol consumed in these markets was home brew, 6.2 million hectolitres was cheap wine and 3.6 million hectolitres was cheap spirits. Lager represented only about 20 percent of the alcohol consumed.
SABMiller said after investments of $16 million over the past 18 months, it expected that Chibuku volumes across new markets in Africa would be well over 500 000 hectolitres by the end of the financial year.
Following a pilot scheme in Ghana, Mozambique, Swaziland and Tanzania, full-scale Chibuku production has been launched in each of these four countries.
The brewer said a Lesotho pilot had been launched with commercial sales expected in the next few months.
The brewer plans to install a line for traditional beer as part of the new brewery under construction in Mbarara.
Given its short life span, Chibuku must be brewed and consumed locally.
Parallel to Chibuku, SABMiller launched a new variant, Chibuku Super, in Zambia last month. This beer is lightly carbonated and pasteurised, which means it has a fixed alcohol content. Chibuku Super has been brewed on a small commercial basis in Zambia for the past 12 months.
Mark Bowman, the managing director of SABMiller Africa, said: “We have been investing heavily to grow capacity and stay ahead of demand across Africa. The expansion of our Chibuku operations illustrates how we are driving our affordability strategy, production innovation and maintaining momentum behind our ‘Farming Better Futures’ programme through this continued investment.”
According to Bloomberg, Bowman said in London yesterday that the cost of expansion and higher commodity prices would restrict SABMiller’s margin growth in Africa. The brewer had predicted last year that profitability on that basis would rise by between 0.8 percentage points and 1 percentage point a year over the next three to four years.
He said SABMiller would maintain investment in the region at about $300m to $500m a year, building more breweries and bottling facilities.
“On balance we do expect to improve our margins over the next two to three years.”
The brewer said the African beer expansion would also provide a guaranteed market for smallholder farmers through the company’s use of maize and sorghum in production.
SABMiller has already sourced maize and sorghum from about 40 000 smallholder farmers across Africa.
SABMiller fell 0.62 percent to R372 on the JSE yesterday.